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Political roller-coaster set to continue as Argentina imposes currency controls

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Rebecca Valli

Over the weekend Argentinian President Macri announced the imposition of capital controls in an effort to stabilize the country’s currency and avoid a deepening of the current financial crisis. Cornell University experts weigh in on what to expect as the Latin American country continues to tackle its debt crisis.

Kenneth Roberts

Professor of Government

Kenneth Roberts, teaches comparative and Latin American politics at Cornell University, with an emphasis on the political economy of development and the politics of inequality.


Roberts says:

“The recent plunge in Argentine currency and bond markets, along with the government's re-imposition of capital controls, provide graphic evidence of the failure of Mauricio Macri's strategy to right the Argentine economy through orthodox free market reforms.

“Macri's unexpected defeat in recent primary elections has rattled the markets and raised the likelihood of a Peronist victory in the October presidential elections, which could well augur a return to more statist and heterodox fiscal and monetary policies. No non-Peronist president has completed a term in office — much less been re-elected — since the 1920s, and with Macri on the ropes, Argentina's political roller-coaster ride appears set to continue.”   

Lourdes Casanova

director of the Emerging Markets Institute at Cornell University

Lourdes Casanova is the director of the Emerging Markets Institute. She says the peso’s current downward spiral has contributed to making the Argentinian national debt unmanageable.


Casanova says:

“September 2018 saw the biggest ever loan every granted to any country by the International Monetary Fund: $57 billion. Was this Argentina’s good luck and the solution to all its economic ills or the beginning of a new nightmare?

“The numbers have been stubbornly bad in ‘horribilis’ August: the stock market felt 72%, the currency lost 38% and inflation is out of control with some estimates putting the annual inflation to be around 60%.

“This crisis has been in the making for a long while with high inflation, a stagnant economy, the value of the Argentinean peso in downward spiral and, even worse a debt in dollars to be repaid in devalued pesos.

“Minister Lacunza is ready to spend an additional $50 billion plus the $13 billion already spent of Central Bank reserves to stabilize the peso. As in 2001 and in the ‘80s, a debt which could have been manageable, it is no longer so because the local currency is in a downward spiral.”

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